Donald Trump’s sweeping tariff strategy has been thrown into fresh turmoil after the US Supreme Court ruled much of his trade regime illegal, leaving allies who struck deals with Washington worse off and deepening global uncertainty. The judgment, handed down last week, invalidated key parts of the president’s tariff architecture, forcing the administration to scramble for legal alternatives and prompting trading partners to reassess their positions.
Just days before the ruling, Trump had hailed a $550bn investment pledge from Japan as evidence that “America is WINNING again”. Tokyo had agreed to dramatically increase US investment in exchange for lower tariffs on Japanese exports. But the Supreme Court decision now means most nations – including Japan and others that negotiated deals – will face a flat 15% tariff on their goods from Tuesday. Countries such as China and India, which had not made concessions, received significant tariff cuts, while the UK and other dealmakers may face higher barriers.
The European Union has paused ratification of its agreement with the US, demanding “full clarity” on a trade platform that is now as clear as mud. Japan’s Itsunori Onodera, a senior Liberal Democratic Party figure, told Fuji Television: “To be very frank, it’s a real mess.” India, which had committed to buying $500bn in US goods and stopping Russian oil purchases, has postponed trade talks due to take place in Washington this week. Arvind Subramanian, a former chief economic adviser to the Indian government, said: “I think these negotiations are going to be on hold for a while, until the US itself figures out what it can, and cannot, do.”
The Trump administration is now leaning on Section 122 of the Trade Act of 1974, a provision not previously used for such purposes, which allows tariffs of up to 15% for a maximum of 150 days. Beyond that, the White House has signalled plans to launch investigations under Section 301 of the same law to justify further tariffs. Trade Representative Jamieson Greer insisted “the policy hasn’t changed”, but the legal patchwork has left businesses and governments struggling to grasp what comes next.
Trump, keen to project strength, has urged trading partners to maintain their side of bargains and threatened to impose new tariffs in a “much more powerful and obnoxious way” on those who resist. Yet the ruling has visibly weakened his hand, with some nations now seeking to exploit the uncertainty. Johannes Fritz of the St Gallen Endowment for Prosperity Through Trade noted that the flat 15% rate compresses the wide spread of tariffs that previously existed, levelling the field but also punishing those who made concessions.
